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Thursday, January 25, 2018

PSU banks to get annual report cards, Rs 88k crore infusion

THE Centre on January 24 announced that it would infuse over Rs 88,000 crore as capital in public sector banks this fiscal, including Rs 80,000 crore through recapitalisation bonds and Rs 8,139 crore as budgetary support.
“This plan addresses the regulatory capital requirement of all PSBs and provides a significant amount towards growth capital for increasing lending to the economy,” said Finance Minister Arun Jaitley.
Financial Services Secretary Rajeev Kumar said that banks would have to first... accept and adopt the reforms package finalised by the Finance Ministry, which is aimed at six themes of customer responsiveness, responsible banking, credit offtake, PSBs as Udyami Mitra, deepening financial inclusion and digitalisation and developing personnel for brand PSB.
According to the capital infusion plan for this fiscal, State Bank of India will get Rs 8,800 crore capital and Bank of India - Rs 9,232 crore. UCO Bank will get Rs 6,507 crore, Punjab National Bank - Rs 5,473 crore, Bank of Baroda - Rs 5,375 crore, Central Bank of India - Rs 5,158 crore, Canara Bank - Rs 4,865 crore, Indian Overseas Bank - Rs 4,694 crore, and Union Bank of India - Rs 4,524 crore.
Oriental Bank of Commerce would get Rs 3,571 crore, Dena Bank - Rs 3,045 crore, Bank of Maharashtra - Rs 3,173 crore, United Bank of India - Rs 2,634 crore, Corporation Bank - Rs 2,187 crore, Syndicate Bank - Rs 2,839 crore, Andhra Bank Rs 1,890 crore, Allahabad Bank - Rs 1,500 crore, and Punjab and Sind Bank - Rs 785 crore.
The recapitalisation bonds will be non SLR status and non-tradeable. They will be issued in six tranches with a tenure of 10-15 years, said Economic Affairs Secretary Subhash Chandra Garg, adding that they will be a cash neutral arrangement and so will not impact the Centre’s fiscal deficit.
Government will infuse Rs 88,139 crore in 20 PSBs during the current fiscal, with IDBI Bank getting the most - Rs 10,610 crore
"Each public sector bank (PSB) is an article of faith. All PSBs will be adequately capitalised and enabled to serve people and support inclusive growth," said Kumar.
After announcing a Rs 2.11 lakh crore recapitalisation plan this year, the Finance Minister on Thursday spelt out a banking road map to improve the functioning of public sector banks.
Rajeev kumar @rajeevkumr, Secretary Department of Financial Services(DFS),Min of Finance, Gov. of India, tweeted, “Public accountability of PSBs. Independent agencies to evaluate and rank PSBs annually on reforms spurring Competition, showcasing Transparency.”
The new set of guidelines, the finance ministry said, will stress on rigorous due diligence, post-sanction follow-up on loans and separate asset management verticals to ensure public savings are untouched.
After announcing a Rs 2.11 lakh crore recapitalisation plan this year, the Finance Minister on Thursday spelt out a banking road map to improve the functioning of public sector banks.
The new set of guidelines, the finance ministry said, will stress on rigorous due diligence, post-sanction follow-up on loans and separate asset management verticals to ensure public savings are untouched.
The finance ministry said it will not let any public bank to fail, assuring customers that their deposits will be safeguarded at all costs.Here's a 10-point guide to the road map the government has planned for public sector banks

Banks to reorient themselves to support MSME growthRecapitalisation will depend on the basis of the performance of the banks.Banks should not get into all activities, must concentrate on core strengths. Each bank to adopt a policy in accordance with their core strengths.PSU banks need to identify non-core assets to monetiseBanks to minimise their exposure to big corporate loans to 10 per cent in a consortium borrower and all loans above Rs 250 cr will undergo special monitoring.Banks to be given capital based on customer responsiveness, responsible banking, credit offtake through technology and cleanliness, MSME friendliness, financial inclusion and digitisation deepening.Customers money is safe in banks. They will get their money back if bank is found indulging in fradulent activitiesEvery PSB to promote apps for easy opening of accounts, doorstep banking. A survey will be conducted by a reputed agency annually which will reveal their performanceBreach of any loan covenant will be shared with entire lending consortium as a red flagHow much PSBs will get State Bank of India Rs 8,800 cr Bank of India Rs 9,232 crUCO Bank Rs 6,507 crPunjab National Bank Rs 5,473 crBank of Baroda Rs 5,375 crCentral Bank of India Rs 5,158 crCanara Bank - Rs 4,865 crIndian Overseas Bank - Rs 4,694 crUnion Bank of India - Rs 4,524 crOriental Bank of Commerce Rs 3,571 crDena Bank - Rs 3,045 crBank of Maharashtra - Rs 3,173 crUnited Bank of India - Rs 2,634 crCorporation Bank - Rs 2,187 crSyndicate Bank - Rs 2,839 crAndhra Bank Rs 1,890 crAllahabad Bank - Rs 1,500 cr andPunjab and Sind Bank - Rs 785 cr